What Is the Difference between a Customer & a Consumer?
What you need to know to effectively target customer and consumer audiences.
For those who are new to the world of business — and even for those who aren’t — understanding the actual meaning of some specific business and marketing terms can be tricky. One example of terms that are often mistaken to mean the same thing is customers and consumers. Often used interchangeably, these terms can represent entirely different people in very different buying positions. Often, however, customers and consumers are one in the same.
As a business owner, you can benefit from having a clear understanding of who your customers and your consumers are, and what makes them different. Are you targeting customers, or consumers? Much of that depends on your business and the products or services you offer. Read on to find out the key differences between the two!
What Makes Someone a Customer?
A customer can be defined as anyone who purchases a specific product or service. Keep in mind however, customers are the individual who purchases a product or service, but they’re not always the person who consumes it. For example, when an individual purchases food for their family at a supermarket, the person who performs the shopping and pays for the groceries is a customer. In fact, unless they didn’t buy anything for themselves, they are also a consumer. The family that will utilize the groceries, but were not part of the buying and paying process are consumers, not customers.
What Makes Someone a Consumer?
A consumer is someone who consumes — or uses — a specific product or service. A consumer may or maynot be a customer, meaning the consumer is not always the individual who made the actual purchase. Simply put, consumers are the end users but they are not always the customer. Many consumers, like children for example, may not have actual buying power as a customer. Despite a consumer’s potential inability to actually purchase items or services, it’s important to remember that they still heavily influence customer buying decisions and are a critical part of the marketing and sales process.
How Are Customers & Consumers Different?
Though the difference between customers and consumers may seem somewhat irrelevant, it’s actually rather critical when it comes to marketing strategy. The tricky part is that sometimes customers and consumers are the same people, and sometimes they are not.
Having a firm grasp on who is in charge of purchasing your goods or services, and who is actually consuming them is important when you are creating a marketing plan. Certain types of industries typically have customers and consumers that are one in the same. For example, clothing retailers have a higher percentage of customers who are also consumers. Often people prefer to shop for something as personal as clothing for themselves, which means the person making the purchase and consuming, in this case wearing, the item are the same.
Then there are industries, especially those that deal in items that are typically purchased as gifts, that see very few customers who are also consumers due to the nature of their business. For example, if you own a bakery and specialize in custom cakes for celebrations, often the person purchasing the item is not the same as the person consuming it. In the same way, a business that rents out bounce houses is almost always going to do business with a customer, namely a parent or guardian, not the consumer or end user.
Being able to pinpoint who your customers and consumers are is important when you are developing a targeted marketing campaign. For example, toy companies know that they need to appeal directly to the children (consumers). However, their marketing strategy cannot completely ignore details that their customers, parents in the case of toys, would be concerned about, like safety and cost. Although the child’s interest may entice a sale, a parent’s willingness to purchase the item is equally, if not more important.
Why Does Targeting Customers & Consumers Matter?
As a business owner, you know targeting the right people to purchase your products or services is a vital part of your business’s success. If you’re attempting to do this without being aware of the difference between customers and consumers — then you may be targeting the wrong audience. By targeting the wrong audience, you could be failing to retain customers — or even convert them in the first place.
Let’s turn to the toy industry again to help further illustrate how the distinction between customers and consumers can be extremely important to sales and marketing strategies. Remember, toy customers are typically parents, whereas toy consumers, those who use the products, are children. In this case, the consumers (children) are typically not able to purchase a product without their parents, the customers. Therefore, it’s important that all marketing campaigns appeal to both parents and children.
Why? Because parents, afterall, truly hold the purchasing power as children are not able to purchase products for themselves. However, if a child is sold on a toy, this can heavily influence a parent’s decision to buy. So, it is important to appeal to the consumer, the child, but it is not enough to ensure a sale. If a parent believes a toy is unsafe, unhealthy, or simply a bad value this may prohibit a sale, no matter how much a child may desire that toy. Therefore, it is critical that marketing efforts appeal to both children and parents (consumers and customers) on points that appeal to each group. Ignoring either side of the customer/consumer equation for toy companies could negatively impact the success of their marketing and sales initiatives.
How Do I Know If Customers or Consumers Are Driving Sales?
The only way to know whether customers, consumers, or a mix of the two is driving sales is to examine both groups and examine their habits. Depending upon your industry or even niche within an industry, you may have to do some investigating. To start, ask yourself if the person who actually makes the payment for the product or service is the same person who will use or consume it. More often than not, there is some customer-consumer overlap. Try and determine how much consumer-customer overlap there is, and what percentage of your sales can be attributed to each group. If customers and consumers make up two distinct groups for your business type, like the toy industry, you will want to dedvelop a marketing strategy that distinctly appeals to both groups.
By having a clear understanding of the difference between who is purchasing your product or service and who is consuming it, you’re in a better position to grow your business and increase your sales. While marketing is a powerful tool, it loses much of its vigor and effectiveness when it targets the wrong people. Simply put, knowing the difference between your customers and consumers can help you get the most out of your marketing dollars.
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